Foxconn Technology Group, the Taiwanese contract electronics manufacturer which is also the largest supplier for gadget designer Apple Inc., will take charge of the production of the device, the report said.

On the software front, the handset will use the Yi mobile platform which is compatible with Android apps. Consumers may use services such as cloud storage, photos, music, and maps for free over Baidu's servers.

As for the price, the phone will cost no more than $160, the report said.

The company released its first smartphone, the Streak Pro D43, in December 2011. The $474 phone is produced by U.S. hardware manufacture Dell Inc. and targeted at business users.

Robin Li, Baidu’s CEO emphasized in the latest conference call that the company had earmarked mobile as an important growth channel.

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